MANAGING HUMAN RESOURCE

In today's tight financial and labour markets, the ability to secure and retain valuable management resources is one of the most important financial challenges a multi-unit owner will face. It may be argued that people are more valuable assets than the franchise itself because the franchise is worth nothing without its employees. In choosing whether or not to make an investment, investors are looking closely at a company's management team to see whether an experienced, solid team is in place.

In light of the importance of human resources, this article will discuss human asset management. We view human asset management as a continuum. This continuum is illustrated in the following chart:

 

                     

                     

Once an employer finds the right person to hire, the process of hiring becomes very important. The hiring process is the first element of the human asset management continuum. An employer must ensure the newly hired person remains a valuable asset. Consider the following checklist when hiring a new employee: · Does the employee clearly understand his or her employment contract?

· Does the employee feel he or she has received appropriate incentives?

· Has the employee been provided with a clear understanding of his or her termination rights?

· Do you, as an employer, understand the local laws and the costs associated with hiring and terminating each employee (whether the employment is terminated: (i) with cause; (ii) without cause; or (iii) by retirement).

The next major component in the employment continuum is an on going responsibility to each employee. A multi-unit operator must have in place the appropriate span of controls to be able to effectively communicate change in the business, authority, job modification and job description to the employees.

Another major area along the continuum is on going employee benefits and incentives. Each employee is an asset that needs to be protected and provided for under his or her employment benefits. In addition to cash compensation, these benefits include 401Ks, non-qualifying incentive plans, cafeteria plans (such as medical reimbursement), ownership participation (actual or phantom), or the rights of the employee to have his or her name on the franchise agreement. Many of these items involve governmental compliance, such as ERISA issues. Other benefits are merely contractual obligations between the employer and employee.

Management of the employee's performance is another aspect of the continuum. Management involves constant review, documentation of the employee's performance, counselling (where appropriate), and adjusting various aspects of the employee's compensation and benefits. The multi-unit operator's human resource department needs to be familiar with current employment laws and maintain up-to-date files.

The human resources department needs to pay particular concern to the employee's compliance with discrimination and harassment laws and policies. This is an area in which very significant liability can attach to the employer. By proper management of employees and by the creation and adherence to appropriate policies, employers will limit or even eliminate their legal liability. It is imperative that companies have a clear policy of zero tolerance of sexual harassment or discrimination. That policy must be clearly conveyed to all employees, and it must provide an appropriate person for employees to contact with their complaints.

The final and most difficult aspect of the employment continuum is terminating the employee. There are various forms of employee termination: (a) at will termination; (b) termination due to a violation of a specific clause in an employment contract; (c) retirement; or (d) voluntary termination by the employee.

Obviously, there are many legal constraints and issues regarding employee termination. The employee being terminated is now in one of life's most stressful situations. Understand and treat the employee with respect. Someone (probably from the human resources department) should explain to the employee his or her termination rights clearly and completely. Treating a departing employee fairly is more than an issue of ethics; it's just plain good business and will save the employer countless problems. An attorney should be consulted with a difficult employee termination issue.

Keeping the entire continuum of human asset management in mind, look at each new hire and key management person as a valuable human and financial asset of the company. Multi-unit operators should manage their human assets with the same kind of futuristic view used to manage their financial and physical assets.